Grenada has been experiencing robust economic growth, primarily fueled by its construction and tourism sectors, according to reports from International Monetary Fund (IMF) officials. The country's growth for this year is projected to surpass pre-pandemic levels, with a significant boost from the construction industry and an uptick in tourist arrivals, aided by improved airlifts.
During a staff visit that concluded on Sunday, the IMF team leader Mr. Janne Hukka expressed optimism regarding Grenada's economic trajectory. The nation's Citizenship-by-Investment (CBI) program has been generating record revenues, which have been instrumental in supporting both public and private investments. Despite this positive trend, the IMF anticipates a normalization of CBI revenues in the future.
The fiscal health of Grenada has shown marked improvement due to increased revenues leading to a government surplus that exceeded expectations. Debt levels have continued on a downward slope. The implementation of the new Fiscal Resilience Act is set to further strengthen economic stability with measures including streamlined fiscal rules and the establishment of the Fiscal Resilience Oversight Committee (FROC). Additionally, reforms such as the regularization of public sector workers and adjustments to pensions are aimed at ensuring the sustainability of social security systems.
While inflation remains under control at 2.3%, with food prices showing signs of stabilization, Grenada still faces potential risks. These include external shocks, commodity price volatility, and natural disasters that could impact economic stability.
In contrast to the overall financial stability in Grenada, credit unions have been grappling with high levels of non-performing loans, signaling a need for stricter oversight measures. The imminent launch of the Eastern Caribbean Currency Union (ECCU) regional credit bureau is expected to help mitigate lending risks.
The IMF also highlighted tax system modernization efforts that have enabled online payments and are part of broader public sector service reforms. These reforms are designed to enhance efficient service delivery and include job function reviews. Parametric pension adjustments are also being implemented under the guidance of FROC to secure the future of the National Insurance Scheme.
The IMF team commended Grenada for its cooperative approach during their discussions and recognized the country's efforts in maintaining economic resilience amidst global uncertainties.
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